Are there really free credit reports?



You have probably seen the commercials for information on how to receive a free credit report. These companies will give you free information and then charge you in the fine print. Congress passed the Fair and Accurate Credit Transactions Act on December 4, 2003. It says consumers may receive one free credit report, per year from each of the major Credit Bureaus. Go to Annual Credit Report for more information or call 1-877-322-8228. This free credit report does not include your FICO score.

What is a FICO Score?

FICO is the abbreviation for Fair Isaac Corporation. Your FICO score helps creditors determine:

whether you qualify for credit

how much your interest rate will be

how much your credit limit will be

Your FICO score is a rating between 300 and 850. There are three major Credit Bureaus. They are Equifax, Experian and TransUnion. Do you pay your creditors on time? This makes up 35% of your FICO score. Don't max out your credit cards. Debt to credit ratio makes up 30% of your FICO score. 15% is determined by the length of your credit history. 10% is determined by the types of credit. (installments, revolving, consumer finance) and 10% depends on how many time you have recently applied for credit.

Tips for using credit

Keep your credit card balances as low as possible. Try not to spend more then half of your available credit.
Do not exceed your credit limit.
Don't be late with your payments! A late fee can harm your credit rating and the loan company may raise your interest rate on that card.
Always pay more then the minimum balance due, if not the entire balance.
Try to find a No Annual Fee Credit Card, with the lowest APR (Annual Percentage Rate) that offer you some type of rewards (such as cash back, frequent flyer miles or free gasoline).